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Starz will not renew its distribution deal with Netflix in February 2012  (Source:
Starz released a statement that said it would not renew its distribution deal with Netflix when it expires next February, which means Netflix will lose Disney and Sony-related programming from its library

Earlier this year, Netflix was sitting pretty with favorable financial results and 29.7 percent of peak downstream traffic in North America, which made it the largest source of Internet traffic overall. The on-demand Internet streaming and DVD rental service even led Blockbuster to file bankruptcy and made Hollywood executives shake in their boots.

But in recent months, Netflix has lost some of that spark after announcing that it was changing its plans and prices. Instead of paying $9.99 per month for unlimited video streaming as well as DVD rentals, the two would be separated into their own monthly plans for $7.99 each. If a user wants to continue receiving both video streaming and DVD rental-by-mail, the monthly fee is $15.98. These changes just went into effect today.

Customers were outraged, but Netflix explained that it had to raise prices in order to afford hundreds of millions of dollars in streaming rights from movie studios and television networks. Of course, Netflix must pay these prices in order to build its streaming library legally.

Now, Netflix has some new problems on its hands. Satellite TV channel Starz released a statement that said it would not renew its distribution deal with Netflix when it expires next February, which means Netflix will lose Disney and Sony-related programming from its library.

The following is Starz's statement:

Starz Entertainment has ended contract renewal negotiations with Netflix. When the agreement expires on February 28, 2012, Starz will cease to distribute its content on the Netflix streaming platform. This decision is a result of our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content. With our current studio rights and growing original programming presence, the network is in an excellent position to evaluate new opportunities and expand its overall business.

While Netflix has been running its service without Sony programming since June due to a contract violation, Netflix described it as temporary.

The split could mean that someone else will end up with Starz's digital rights, such as DISH Network or Amazon, both of which are building digital video libraries. Another option would be for Starz to create its own digital extension.

The following is Netflix's response to Starz's statement:

Starz has been a great content partner since 2008 and we are thankful for their support.

While we regret their decision to let our agreement lapse next February, we are grateful for the early notice of their decision, which will give us time to license other content before Starz expires.

While Starz was a huge part of viewing on Netflix several years ago because it was some of the only mainstream content Netflix offered, over the years Netflix has spent more and more licensing great TV shows from all four broadcast networks and many cable networks, and we have licensed 1st run movies from Relativity, MGM, Paramount, Lionsgate and others. Because we’ve licensed so much other great content, Starz content is now down to about 8% of domestic Netflix subscribers’ viewing. As we add even more content in Q4, we expect Starz content to naturally drift down to 5-6% of domestic viewing in Q1. We are confident we can take the money we had earmarked for Starz renewal next year, and spend it with other content providers to maintain or even improve the Netflix experience.

We have tremendous respect for the Starz creative team, and we look forward to someday licensing some of their original or licensed content.

Netflix shares fell 9 percent in after-market trading after Starz released its statement.

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Premium -- a dirty word..
By nocturne_81 on 9/2/2011 4:54:17 AM , Rating: 2
So.. I'm paying $90 a month for satellite cable, another $60 for highspeed net, and now there's dozens of companies like pandora, hulu, and netflix that are seeking to have me spend more money to subscribe to their services. At $10 a month, I'd consider it worthwhile for a service like netflix I'd use only perhaps a half a dozen times in a given month, but $16..?!

More than anything, I refuse to pay for digital content -- especially when it's widely available for free. It's incredibly confusing how a single song download costs $1 apiece when I can buy a 14 track album for $8 on amazon. The lack of manufacturing absorbs nearly 90% of the cost, so a typical song should cost a quarter instead of the dollar(-) it costs for a physical copy, just like an ebook should cost a dollar instead of the $10-15 that a physical copy costs. And the worst of all -- $6-10 for a Video-On-Demand rental..? Come on! Most ppl are within a mile of a redbox, so I honestly hope they aren't so loose with their money or lazy to spend these ridiculous amounts.

Unfortunately though, both industries are falling almost completely out of their own greed alone; and their continued practices in the digital realm are only sealing the last nail in their coffin..

RE: Premium -- a dirty word..
By phantom505 on 9/2/2011 8:22:42 AM , Rating: 1
Which is why most of us probably don't pay for cable/satellite. Now does that make the numbers slightly better? If you ask me you're getting robbed paying $90/month for cable/satellite.

RE: Premium -- a dirty word..
By cjohnson2136 on 9/2/2011 9:55:41 AM , Rating: 2
I know I spend 102 every month for cable/internet/phone but I have been considering dropping the phone and cable and just paying for internet. Half the time my wife and I watch stuff from netflix anyway.

RE: Premium -- a dirty word..
By FITCamaro on 9/2/2011 10:46:25 AM , Rating: 1
I pay $95 for satellite and $65 for internet. Separate companies.

By ShaolinSoccer on 9/2/2011 5:45:46 PM , Rating: 2
We pay $105 a month for DirectTV. That includes Filipino stations. We've been with them for 6 years and recently, they gave us Showtime and other channels for free for 3 months. Not to mention that they pay you $100 for every person that signs up and uses your name as a reference. We also have HD with DVR. But I gotta admit, if it weren't for those Filipino channels, we probably wouldn't be with DirectTV.

"When an individual makes a copy of a song for himself, I suppose we can say he stole a song." -- Sony BMG attorney Jennifer Pariser

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